Macro for Managers

Abstract

This note attempts to provide a conceptual overview of macroeconomics. Designed for managers and students of management, it emphasizes fundamental ideas and relationships, rather than mathematical models and formulas. The note identifies—and is structured around—three essential pillars of macroeconomics: output, money, and expectations.

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Americans elected Abraham Lincoln as the nation's first Republican president in November of 1860. Northern political leaders had formed the Republican Party only a few years before, in large measure to combat the spread of slavery. Southerners had long been wary of Northern hostility toward their “peculiar institution,” and Lincoln's 1860 victory proved to be the last straw in this sectional rivalry that had deeply influenced American culture and politics since the earliest days of the republic.
By the time of Lincoln's inauguration five months later, in March 1861, seven Southern states had announced their decision to secede from the Union. Lincoln rejected secession as unlawful and pledged that his government would continue to exercise its authority, as best it could, in the rebellious states. A crisis in South Carolina, the first state to secede, tested Lincoln's mettle in the opening days of his presidency. Federal troops still held Fort Sumter in Charleston harbor, but their supplies were running low. Lincoln would either have to evacuate the fort or risk war by sending provisions. The new president understood the weight of the choice he faced: nothing less than the survival of the Union was at stake.

In January 1965, Rev. Martin Luther King, Jr., the most prominent leader of the civil rights movement in the United States, launched a campaign of civil disobedience in Selma, Alabama, to bring national attention to disenfranchisement of black voters in the South. On Sunday, March 7, as part of this campaign, 400 mostly black protesters, not including King, tried to march across the Pettus Bridge, just outside Selma, only to be stopped by state troopers and local lawmen, who attacked them with tear gas and clubs. That night, all three national television networks broadcast film of the assault. The broadcasts sparked outrage against the attackers and sympathy protests across the country. King announced that he would lead a renewed march over the bridge on Tuesday, March 9.
By early Tuesday morning, however, King had learned that President Lyndon Johnson, whose help he needed to win federal voting rights legislation, did not want him to march, and that a federal judge had issued a restraining order against the march until a hearing could be held. King thought his supporters' passions were so strong that he might not be able to cancel the march even if he wanted to, yet the modern civil rights movement had never before defied a federal court order. President Johnson's representatives told King that he might avoid violating the judge's order if he marched to the bridge and then turned around before crossing it. King did not say what he would do, however, and few of his supporters knew about the turnaround possibility.
Several hours later, with television cameras recording the unfolding events, King led 2000 marchers to the bridge, where state troopers and lawmen waited. Should he try to turn the march around, which his followers might not accept, or try to cross the bridge, contrary to the president's wishes and a federal restraining order?

In early 1891, California lawmakers were considering a plan to reform the state's elections through the introduction of an “Australian” ballot. Under this new system, candidates from all qualifying parties would appear on official ballots, which would be printed by county and municipal governments and which voters would ultimately fill out in secret. This would mark a substantial departure from the existing way in which votes were cast in California, or for that matter in most of the United States. Traditionally, political groups prepared and distributed party-line ballots, called “tickets,” for voters to submit at the polls. Because each party ticket was visually distinctive (in most cases, distinguished by a particular color), it was easy for observers to determine how individual citizens had voted as they handed in their ballots. Closely monitoring the ballot boxes, representatives of the party “political machines” frequently paid supporters who voted for the machine ticket and sought to punish those who did not. Supporters of the Australian ballot promised it would end these abuses, bring greater secrecy and honesty to California's elections, and loosen the grip of party machines on the state and municipal governments.
Despite some opposition in Republican circles, the Republican-dominated Assembly and Senate both passed the ballot bill by large margins in early March and sent it on to the Republican governor, Henry Markham, for his signature. If Markham signed the bill into law, California would join a growing roster of U.S. states using the new, secret ballot, and reformers would claim another victory in their battle against political machines.